CITY COUNCIL MEETING AGENDA February 4, 2025
CITY OF SHASTA LAKE
CITY COUNCIL
MEETING AGENDA
February 4, 2025
6:00 P.M.
Shasta Lake City Council Chambers
4488 Red Bluff Street ◼ Shasta Lake, CA 96019
Mayor: Pamelyn Morgan
Vice Mayor: Justin Jones
Council Members: Toni Coates, Dan Ringwelski, Greg Watkins
OTHER WAYS TO PARTICIPATE IN THE MEETING
• Watch a livestream of the meeting online or view the recording any time after the meeting concludes at the following: cityofshastalake.org/meetings • Submit public comment electronically before the meeting to:
[email protected]. Public comment by email will be read into the record during consideration of the item the comment addresses. Each public comment will be limited to three minutes of reading. Include the item number you are commenting on in the subject line of the email. Once the vote has taken place on an item, no additional public comments will beaccepted.
• Submit public comment by mail addressed to City Clerk, City of Shasta Lake, PO Box 777, Shasta Lake, CA 96019. Mailed comments must be received one day prior to the meeting to be included.
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Call to order (please place electronic devices on silent)
1.2 Statement for the record of Council Members present or absent
1.3 Pledge of Allegiance
1.4 Invocation
2.0 AWARDS & RECOGNITIONS:
2.1 None
3.0 PRESENTATIONS:
3.1 Economic Development Corporation – Stuart Sutherland 1 CITY COUNCIL MEETING AGENDA February 4, 2025
4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
4.1 None
5.0 PUBLIC COMMENT:
This time is set aside for citizens to address the City Council on matters listed on the Consent Agenda as well as other items not included on the Regular Agenda. If your comments concern an item noted on the regular agenda, please address the Council when that item is open for public comment. Each speaker is allocated three (3) minutes to speak. Speakers may not cede their time. Comments should be limited to matters within the jurisdiction of the City. Council discussion or action cannot be taken on items not listed on the agenda other than to receive comments. Speaker forms are available from the City Clerk, 4477 Main Street, Shasta Lake, on the City’s website, or at the back of the meeting hall. If you have documents to present to members of Council, please provide a minimum of seven copies. Pursuant to The Brown Act, the City Council cannot take action on Public Comment Items.
6.0 CONSENT AGENDA:
The items listed under the Consent Agenda are considered routine business and will be voted on together by one motion unless a Council Member requests a specific item to be removed and discussed separately.
6.1 Minutes of the Regular Meeting of January 21, 2025. (pg. 4)
6.2 Payrolls: (pg. 8)
PE 1/18/2025 PD 1/24/2025 $171,883.48
6.3 Checks, E-payments, and wires: (pg. 9)
1/02/2025 $451,364.25
1/09/2025 $2,318,301.89
6.4 Monthly Report of Investment Transactions: (pg. 18) LAIF:
December $13,387,763.43
Chandler:
December $35,838,462.89
6.5 Resolution accepting the Quarterly Cash and Investment Report for the Period Ending December 31, 2024. (pg. 22)
2 CITY COUNCIL MEETING AGENDA February 4, 2025
7.0 PUBLIC HEARINGS:
7.1 None
8.0 REGULAR AGENDA:
8.1 Discussion and possible action to approve Supplemental funding for Financial Support for the Shasta Lake Chamber of Commerce. (pg. 27)
8.2 Discussion and possible action to approve a Resolution accepting the updated Investment Policy. (pg. 34)
8.3 Discussion and possible action to designate a representative for Region 1, CalCities Sacramento Valley Division. (pg. 56)
8.4 Discussion and possible action to approve a letter to Governor Newsom Urging Reevaluation of Policies Impacting Fuel Reduction and Infrastructure Enhancement. (pg. 59)
9.0 STAFF COMMENTS:
10.0 CITY COUNCIL COMMENTS AND REPORTS:
This is the time set aside for Council Members, who may so desire, to give brief comments or reports concerning City matters. The City Council may not enter into discussion on matters reported. Statements made by individual Council Members should not be interpreted as a statement of the City Council. The City Council only takes action by majority vote. • Brief reports by members of the Council regarding correspondence, events and/or meetings attended, and upcoming meetings/events.
• Suggestions/motions for future agenda items.
• In compliance with Assembly Bill 1234, Council will report on attendance at conferences/meetings/events where expenses are reimbursed by the City.
ADJOURNMENT:
Meetings are broadcast on the Wednesday following the meeting at 6:00 PM and the following Friday at 2:00 PM on Charter Channel 181. Videos of meetings are also available through the City website: www.cityofshastalake.org In Compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please call (530) 275-7407. Notification 48 hours prior to the meeting is requested to enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). 3 CITY OF SHASTA LAKE
CITY COUNCIL MEETING MINUTES
MINUTES OF THE REGULAR MEETING
HELD TUESDAY, JANUARY 21, 2025, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Mayor Morgan convened the regular meeting at 6:00 PM
1.2 Council Members present: Jones, Morgan, Ringwelski, Watkins Councilwoman Coates was not in attendance.
1.3 Pledge of Allegiance was led by Councilman Ringwelski
1.4 Invocation
2.0 AWARDS & RECOGNITIONS:
2.1 None
3.0 PRESENTATIONS:
3.1 Central Valley High School Update – Alex Lain, Principal
3.2 SLFPD Quarterly Report – Devin Owens, Fire Marshal
4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
4.1 None
5.0 PUBLIC COMMENT:
Dolores Lucero, Shasta Lake resident
6.0 CONSENT AGENDA:
6.1 Minutes of the Regular Meeting of January 7, 2025.
6.2 Payrolls:
PE 1/04/2025 PD 1/10/2025 $173,089.59
6.3 Checks, E-payments, and wires:
12/19/2024 $979,831.28
6.4 Resolution CC-2025-02 approving a Supplemental Budget Appropriation in the amount of $965,500 for the State of California Department of Forestry and Fire 4 Protection California Climate Investment Wildfire Prevention Grant Program FY 23-24.
6.5 Resolution CC-2025-03 approving a Supplemental Budget Appropriation in the amount of $6,745,000 for the State of California Department of Housing and Community Development Community Development Block Grant Mitigation Resilience Infrastructure Program.
6.6 Resolution CC-2025-04approving a Supplemental Budget Appropriation in the amount of $250,000 for the State of California Department of Housing and Community Development Community Development Block Grant Mitigation Planning and Public Service Program.
Motion/Vote
Councilman Jones requested to pull item 6.4 and 6.6 from the Consent Agenda.
Councilman Watkins requested to pull item 6.5 from the Consent Agenda.
By motion made/seconded (Watkins/Jones), and carried unanimously, the Consent Agenda excluding Items 6.4, 6.5, and 6.6 was approved.
Motion/Vote Item 6.4
After discussion, Mayor Morgan opened item 6.4 for Public Comment.
Public Comment:
Kay Kobe, Shasta Lake business owner
Ann Morningstar, Shasta Lake resident
By motion made/seconded (Watkins/Ringwelski), and carried unanimously, Item
6.4 was approved.
Motion/Vote Item 6.5
After discussion, Mayor Morgan opened item 6.5 for Public Comment.
Public Comment:
Dolores Lucero, Shasta Lake resident
By motion made/seconded (Watkins/Jones), and carried unanimously, Item 6.5 was approved.
Motion/Vote Item 6.6
After discussion, Mayor Morgan opened item 6.6 for Public Comment.
There was no public comment on this item.
By motion made/seconded (Jones/Ringwelski), and carried unanimously, Item 6.6 was approved.
5 7.0 PUBLIC HEARINGS:
7.1 None
8.0 REGULAR AGENDA:
Councilman Watkins requested that item 8.4 be addressed first because the applicant has requested that it be postponed to the February 4, 2025 meeting.
8.4 Discussion and possible action to approve Supplemental funding for Financial Support for the Shasta Lake Chamber of Commerce.
There was no City Council discussion on the action of the item.
Motion/Vote to postpone the item to the February 4, 2025 meeting By motion made/seconded (Watkins/Ringwelski), there was a unanimous consensus to postpone Item 8.4 to the February 4, 2025 meeting.
8.1 Discussion and possible direction of Mobile Food Truck Service Vehicle Regulations.
Public Comment:
Dolores Lucero, Shasta Lake resident
Kristie Mathews, Shasta Lake resident
Motion/Vote:
There was no action required on this item. Staff will review discussion items with the Planning Commission.
8.2 Discussion and Update on the City of Shasta Lake Development Code.
Public Comment:
There was no public comment on this item.
Motion/Vote:
There was no action required on this item.
8.3 Shasta Lake Sheriff’s Annual Update and Discussion on the 2024 Crime Statistics and Body Camera Project Update.
Public Comment:
There was no public comment on this item.
Motion/Vote:
There was no action required on this item.
6 8.5 Discussion and possible action to approve a letter to Governor Newsom Urging Reevaluation of Policies Impacting Fuel Reduction and Infrastructure Enhancement.
Public Comment:
There was no public comment on this item.
Motion/Vote:
The council unanimously agreed to approve a letter to Governor Newsome, with some additional suggestions.
9.0 STAFF COMMENTS:
Jessaca Lugo, City Manager, informed the Council that there was a Community Wildfire Protection Plan.
Council was an update to the Cascade Village housing/waitlist process.
There is a Park Replacement Grant Survey on the City’s website. There will also be a public input meeting on Thursday January 23, 2025, at the Larry J. Farr Community Center.
10.0 CITY COUNCIL COMMENTS AND REPORTS:
ADJOURNMENT:
With no further business, Mayor Morgan adjourned the meeting at 8:24 PM. _________________________________
CHARITY TATLOW, Deputy City Clerk
7 1/22/2025 9:49:42 AM Page 6 of 6
Payroll Check Register
City of Shasta Lake Report Summary
Pay Period: 1/5/2025-1/18/2025
Packet: PYPKT00617 - PE 1.18.2025
Payroll Set: City of Shasta Lake - 01
Type
2 Count
0 4,650.36
0.00 Regular Checks
Manual Checks
0 0.00
0 0.00
Amount
78 167,233.12
Total 80 171,883.48
Reversals
Voided Checks
Direct Deposits
8 9
10 11
12 13
14 15
16 17
Report and Recommendations 6.4 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
____________________________________________________________ TO: Mayor and City Council Members
FROM: Wendy Howard, Finance Director
Jason Peterson, Finance Manager
DATE: February 4, 2025
SUBJECT: INFORMATION ITEM – MONTHLY REPORTS OF INVESTMENT FOR THE PERIOD ENDING DECEMBER 31, 2024
FILE NO.:
RECOMMENDATION
Staff recommends that the City Council receive a report of the Cash and Investment Report for the period ending December 2024.
BACKGROUND
Pursuant to the City of Shasta Lake’s Adopted Investment Policy and Government Code Section 53607, the Finance Director will submit a report of investment transactions to the City Council monthly.
Staff requests the City Council or the public to submit questions regarding the reports prior to the City Council Meeting to permit time to research the question.
FISCAL IMPACTS
There will be no fiscal impact as a result of this information item.
ATTACHMENTS
LAIF Statement
Chandler Investment Summary Report
External Link: Monthly Investment Reports (Full Report)
DISTRIBUTION
City Council
City Attorney
18 Local Agency Investment Fund
P.O. Box 942809
Sacramento, CA 94209-0001
(916) 653-3001
January 13, 2025
LAIF Home
PMIA Average Monthly
Yields
CITY OF SHASTA LAKE
FINANCE DIRECTOR
4477 MAIN STREET
SHASTA LAKE, CA 96019
Account Number: 98-45-868
December 2024 Statement
Tran Type Definitions
Account Summary
Total Deposit: 0.00 Beginning Balance: 13,387,763.43
Total Withdrawal: 0.00 Ending Balance: 13,387,763.43
19 MONTHLY ACCOUNT STATEMENT
City of Shasta Lake | Account #10203 | As of December 31, 2024 CHANDLER ASSET MANAGEMENT | chandlerasset.com
Information contained herein is confidential. We urge you to compare this statement to the one you receive from your qualified custodian. Please see Important Disclosures at the end of the statement.
Chandler Team:
For questions about your account, please call (800) 317-4747, or contact [email protected]
Custodian:
First Clearing
20 CONFIDENTIAL | 2
City of Shasta Lake | Account #10203 | As of December 31, 2024 Execution Time: 01/03/2025 05:42:57 PM Chandler Asset Management | [email protected] | www.chandlerasset.com | 800.317.4747
PORTFOLIO SUMMARY
Portfolio Characteristics
Sector Allocation
Performance Review
Account Summary
Maturity Distribution
Top Issuers
Credit Quality
Total Rate of Return 1M 3M YTD 1YR 2YRS 3YRS 5YRS 10YRS Since Inception (01/01/14)
City of Shasta Lake 0.09% (0.07%) 4.36% 4.36% 4.57% 1.97% 1.71% 1.69% 1.66% Benchmark Return* 0.24% (0.05%) 4.09% 4.09% 4.18% 1.50% 1.40% 1.40% 1.33% Average Modified Duration 1.84
Average Coupon 3.41%
Average Purchase YTM 3.87%
Average Market YTM 4.43%
Average Quality AA
Average Final Maturity 2.16
Average Life 1.90
Beg. Values as of
12/01/2024
End Values as of
12/31/2024
Market Value 35,681,040.34 35,724,209.77
Accrued Interest 245,589.49 234,809.50
Total Market Value 35,926,629.83 35,959,019.27
Income Earned 97,152.55 125,775.70
Cont/WD (60.00) (40.00)
Par 35,962,265.67 36,088,729.74
Book Value 35,720,445.73 35,838,462.89
Cost Value 35,476,884.35 35,568,417.56
Government of The United States 36.98%
FHLMC 9.90%
Federal Home Loan Banks 9.83%
Farm Credit System 3.95%
American Express Credit Master Trust 2.07%
Bank of America Credit Card Trust 1.87%
FNMA 1.64%
Chase Issuance Trust 1.45%
*Periods over 1 year are annualized.
Benchmark: ICE BofA 1-3 Year US Treasury & Agency Index Secondary Benchmark:
*See Footnote
The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch 21 Report and Recommendations 6.5 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Wendy Howard, Finance Director
DATE: February 4, 2025
SUBJECT: CASH & INVESTMENT REPORT FOR DECEMBER 31, 2024 FILE NO:
RECOMMENDATION:
Staff submits for approval the attached Cash & Investment Report for the period ending December 31, 2024.
BACKGROUND:
Per California Government Code section 53600.5 and the City’s investment policy, the primary objectives of the City’s investment program, listed in order of priority, are safety, liquidity and return. The City’s investment policy, which complies with Code, is designed to meet the requirements of Code and ensure that the City’s funds are prudently managed
The City’s investment policy requires that the Finance Director submit an investment report to the City Council (governing body) each quarter that consists of the following information:
issuers (bank or institution)
type of investment or description
dollar amount
interest rate
market valuation
percent of each investment within the overall portfolio date of maturity
The source of the valuation of each investment is required to be reported to the City Council. Additionally, a statement indicating the agency’s ability, or lack thereof, to meet the next six (6) months cash flow requirements is required. 22 Each of the criteria listed above has been addressed in the attached analysis of the cash and investments that the City held on December 31, 2024. The source of market valuations has been quoted from documents received from the custodian bank or the institution holding the investments. If staff did not receive this information from the bank or institution, market value has been listed as equal to the carrying amount. Additionally, we have indicated whether funds are “restricted” for a particular purpose. Restricted funds are usually the amount of funds required to service the last debt service payment on a loan or funds for special projects (water improvement project and housing rehabilitation).
On an overall basis, the City of Shasta Lake should be able to meet its cash flow requirements for the next six months.
FISCAL IMPACTS:
None
ATTACHMENTS:
• City of Shasta Lake Cash & Investment Report
• Resolution for the approval of the December 31, 2024 Cash & Investment Report • Cash and Investment Notes
DISTRIBUTION:
City of Shasta Lake City Council
City of Shasta Lake Files
23 This is a summary of the City’s investments arranged by the different institutions holding the assets.
Market Date of
Bank or Institution Description Amount Interest Rate Valuation % of Portfolio Maturity Cornerstone Community Bank Checking Account $3,132,325 n/a $3,132,325 5.5861% n/a Cornerstone Community Bank Money Market Account $3,302,543 n/a $3,302,543 5.8896% n/a City of Shasta Lake Petty Cash $2,100 n/a $2,100 0.0037% n/a Wells Fargo Investments Investments $35,726,862 variable $35,958,430 64.1269% Varies State of California LAIF-City $13,387,763 4.62% $13,382,702 23.8662% n/a Shasta County Trustee
(Restricted) LAIF-County* $295,910 4.62% $295,798 0.5275% n/a Grand Total $55,847,503 $56,073,898 100%
CalPERS CERBT ** Retiree Health Benefit Trust $9,849,010 variable $9,849,010 n/a n/a CalPERS CEPPT ** Retiree Pension Benefit Trust $100,521 variable $100,521 n/a n/a *Restricted = Debt Service Reserve Requirements
** This is a portfolio investment and not a bank deposit. Each employer owns a percentage of the portfolio, and does not have direct ownership of the securities in the portfolio.
It is expected that the City of Shasta Lake will be able to meet its cash flow requirements for the next six months. ____________________________________ 31-Dec-2024
Wendy Howard Date
Finance Director
City of Shasta Lake
Analysis of Cash and Investments
December 31, 2024
24 RESOLUTION CC-2025-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
ACCEPTING THE QUARTERLY CASH AND INVESTMENT REPORT FOR THE PERIOD ENDING DECEMBER 31, 2024
WHEREAS, the Chief Fiscal Officer is required under Senate Bills 564 and 866 to provide a quarterly investment report to the City Council, and
WHEREAS, the report includes the issuers, type of investment or description, dollar amount, interest rate, market valuation, the percent of each investment within the overall portfolio, the date of maturity, and
WHEREAS, the source of the valuation of each investment has been quoted from documents received from the bank or institution that is the issuer of each of the investments and when not supplied the amount has been listed as equal to the carrying value, and
WHEREAS, on an overall basis, the City of Shasta Lake will be able to meet its cash flow requirements for the next six months.
NOW, THEREFORE BE IT RESOLVED that the Shasta Lake City Council accepts the Quarterly Cash and Investment Report for the Period ending December 31, 2024 for review.
PASSED, APPROVED, AND ADOPTED this 4th day of February, 2025, by the following vote:
AYES:
NOES:
ABSENT:
PAMELYN ANNE MORGAN, Mayor
ATTEST:
CHARITY TATLOW, Deputy City Clerk
25 Cash Accounts Held at December 31, 2024
CCB Checking Account - The City’s checking account at Cornerstone Community Bank is primarily used to manage the day-to-day operations of the City. The Money Market account is used to facilitate liquidity. Cornerstone is matching LAIF interest.
Wells Fargo Advisors CD’s (Managed by Chandler) - The Wells Fargo account holds a mix of investments, which comply with California regulations. The yield on these investments varies.
Local Agency Investment Fund (LAIF)-City - LAIF is where the City keeps its idle cash for all funds. It’s essentially the City’s cash reserves and is necessary for liquidity. This type of account allows the City to deposit and withdraw funds a maximum of 15 transactions per month without fees or penalties.
LAIF-County - The County LAIF account is essentially a reserve fund for the debt service for the USDA sewer loan. This $5.6 million loan was used to finance the expansion of the wastewater treatment plant. The final payment on the bond is due December 2034. 26 27
AGENDA ITEM 8.1
SUPPLEMENTAL INFORMATION
ORIGINAL JANUARY 21, 2025
AGENDA ITEM 8.4
TO BE CONTINUED TO THE
FEBRUARY 4, 2025 AGENDA
28 29
30 31
32 33
Report and Recommendations 8.2 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Wendy Howard, Finance Director
DATE: February 4, 2025
SUBJECT: ANNUAL REVIEW OF INVESTMENT POLICY
FILE NO.:
RECOMMENDATION:
Staff requests City Council review and accept the updated investment policy.
BACKGROUND:
The investment policy provides the basis for the management of a prudent, conservative investment program. Pursuant to Section 53646 of the California Government Code, and Senate Bills 564 and 866, City Council should review and approve the investment policy annually. The currently adopted investment policy was reviewed and approved by Council on November 21, 2023.
There are only minor, non-substantive changes that have been incorporated in this updated policy. These are:
XI. Authorized Investments
• Added the word “total” throughout the section when describing portfolio limits to encompass the whole portfolio.
• Federal Agencies: Included a limit on callable agency securities (20%) XVIII. Reporting
• Monthly Reports: Removed the time to submit monthly transactions as it is not specifically stated in California Government Code
• Quarterly Reports: Added that an entity now has 45 days following the quarter end to submit a quarterly report to the legislative body of the agency per Senate Bill 1489
• Glossary of Investment Terms: Updated to add or remove terms that are or are not used within the investment policy.
34 We currently use Chandler Investments to manage the portion of the City’s portfolio which had previously been held by Wells Fargo as custodian. Chandler is familiar with, and ensures that we are in compliance with, the related Government Code. They have reviewed this policy and recommended the changes. Wells Fargo informed us that they no longer will handle municipal investments, so we switched the custodian to US Bank at the end of January.
FISCAL IMPACTS
None
ATTACHMENTS
• City of Shasta Lake Investment Policy
• Resolution for the approval of the Investment Policy
DISTRIBUTION
City of Shasta Lake City Council
City of Shasta Lake Files
35 RESOLUTION CC-2025-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
ACCEPTING THE UPDATED INVESTMENT POLICY
WHEREAS, Government Code Section 53646 authorizes the Chief Fiscal Officer to annually render to the City Council a statement of investment policy, and WHEREAS, Government Code Section 53646 requires the City Council to review and approve, at a public meeting, the statement of investment policy, and WHEREAS, the Investment Policy describes the investment of City funds in compliance with the Municipal Code and state law.
NOW, THEREFORE BE IT RESOLVED that the Shasta Lake City Council approves the Statement of Investment Policy.
PASSED, APPROVED, AND ADOPTED this 4th day of February, 2025, by the following vote:
AYES:
NOES:
ABSENT:
PAMELYN ANNE MORGAN, Mayor
ATTEST:
CHARITY TATLOW, Deputy City Clerk
36 INVESTMENT POLICY
ADOPTED FEBRUARY 4, 2025
CONTENTS
I. INTRODUCTION ...................................................................................................................1 II. SCOPE.................................................................................................................................1 III. OBJECTIVES........................................................................................................................1 IV. DELEGATION OF AUTHORITY..............................................................................................2 V. PRUDENCE..........................................................................................................................2 VI. ETHICS AND CONFLICTS OF INTEREST.................................................................................3 VII. INTERNAL CONTROLS .........................................................................................................3 VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS ...............3 IX. COLLATERALIZATION .........................................................................................................5 X. DELIVERY, SAFEKEEPING AND CUSTODY............................................................................5 XI. AUTHORIZED INVESTMENTS .............................................................................................. 6 XII. MAXIMUM MATURITY ......................................................................................................10 XIII. PROHIBITED INVESTMENT VEHICLES AND PRACTICES.......................................................11 XIV. INVESTMENT POOLS/MUTUAL FUNDS…………………………………………………..11 XV. RISK MANAGEMENT AND DIVERSIFICATION .....................................................................12 XVI. REVIEW OF INVESTMENT PORTFOLIO................................................................................13 XVII. PERFORMANCE EVALUATION............................................................................................13 XVIII. REPORTING.......................................................................................................................13 XIX. REVIEW OF INVESTMENT POLICY......................................................................................14 GLOSSARY OF INVESTMENT TERMS .................................................................................................15 37 1
I. INTRODUCTION
The purpose of this investment policy is to identify various policies and procedures that will foster a prudent and systematic investment program designed to seek the City of Shasta Lake’s objectives of safety, liquidity and yield through a diversified investment portfolio.
This policy also serves to organize and formalize the City’s investment-related activities, while complying with all applicable statutes governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal Treasurers Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public Treasurers (APT).
This investment policy was endorsed and adopted by the City Council and is effective as of the 21st day of November, 2023, and replaces any previous versions.
II. SCOPE
This policy covers all funds and investment activities under the direct authority of the City, as set forth in the State Government Code, Sections 53600 et seq., with the following exceptions:
• Proceeds of debt issuance shall be invested in accordance with the City’s general investment philosophy as set forth in this policy; however, such proceeds are to be invested pursuant to the permitted investment provisions of their specific bond indentures.
• Any other funds specifically exempted by the City.
POOLING OF FUNDS
Except for cash in certain restricted and special funds, the City will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
III. OBJECTIVES
The City’s overall investment program shall be designed and managed with a degree of professionalism worthy of the public trust. The overriding objectives of the program are to preserve principal, provide sufficient liquidity, and manage investment risks, while seeking a market-rate of return.
SAFETY. Safety of principal is the foremost objective of the investment program. Investments will be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
To attain this objective, the City will diversify its investments by investing funds among a variety of securities with independent returns.
38 2
• LIQUIDITY. The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. • YIELD. The investment portfolio will be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints for safety and liquidity needs.
IV. DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from California Government Code, Sections 53600 et seq.
The City Council is responsible for the management of City funds, including the administration of this investment policy. Management responsibility for the cash management of City funds is hereby delegated to the Finance Director.
The Finance Director will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate employees.
Such procedures will include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Finance Director.
The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.
The City’s overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City. The Finance Director and other authorized persons responsible for managing City funds acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
V. PRUDENCE
Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this 39 3
chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the City. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.”
VI. ETHICS AND CONFLICTS OF INTEREST
All participants in the investment process shall act as custodians of the public trust.
Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. Thus employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or impairs their ability to make impartial investment decisions.
Employees and investment officials shall disclose to the Finance Director any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of the City.
VII. INTERNAL CONTROLS
The Finance Director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
Periodically, as deemed appropriate by the City and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity and compliance with policies and procedures.
VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS To the extent practical, the Finance Director shall endeavor to complete investment transactions using a competitive bid process whenever possible. The City’s Finance Director will determine which financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.
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The Finance Director shall maintain procedures for establishing a list of authorized broker/dealers and financial institutions which are approved for investment purposes that are selected through a process of due diligence determined by the City. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).
Institutions eligible to transact investment business with the City include:
• Institutions licensed by the state as a broker-dealer. • Institutions that are members of a federally regulated securities exchange. • Primary government dealers as designated by the Federal Reserve Bank and nonprimary government dealers. • Nationally or state-chartered banks.
• The Federal Reserve Bank.
• Direct issuers of securities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.
All financial institutions which desire to become qualified bidders for investment transactions (and which are not dealing only with the investment adviser) must supply the Finance Director with a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy.
Public deposits will be made only in qualified public depositories as established by State law. Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.
EXTERNAL INVESTMENT ADVISERS
Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, the investment adviser shall make their best efforts to document quotations for comparable or alternative securities. If qualitative characteristics of a transaction, including, but not limited to, complexity of the transaction, or sector expertise of the broker, prevent a competitive selection process, investment advisers shall use brokerage selection practices as described above. When purchasing new issue securities, no competitive offerings will be required as all dealers in the selling group offer the securities at the same original price. 41 5
IX. COLLATERALIZATION
CERTIFICATES OF DEPOSIT (CDS). The City shall require any commercial bank or savings and loan association to deposit eligible securities with a City of a depository approved by the State Banking Department to secure any uninsured portion of a Non- Negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.
COLLATERALIZATION OF BANK DEPOSITS. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.
REPURCHASE AGREEMENTS. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
• The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities. • Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
• The City shall receive monthly statements of collateral.
X. DELIVERY, SAFEKEEPING AND CUSTODY
DELIVERY-VERSUS-PAYMENT (DVP). Settlement of all investment transactions will be completed using standard delivery-vs.-payment procedures.
SAFEKEEPING AND CUSTODY. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities in the City’s portfolio shall be held in safekeeping in the City’s name by a third party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information.
The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i) local government investment pools; (ii) time certificates of deposit, and, (iii) mutual funds and money market mutual funds, since the purchased securities are not 42 6
deliverable. Term and non-negotiable instruments, such as Certificates of Deposit, can be held by the Finance Director, or in safekeeping as the Finance Director deems appropriate.
XI. AUTHORIZED INVESTMENTS
The City’s investments are governed by California Government Code, Sections 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this section apply at the time the security is purchased.
Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity, and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.
An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shall be diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions.
1. MUNICIPAL SECURITIES include obligations of the City, the State of California, any of the other 49 states, and any local agency within the State of California, provided that:
• The securities are rated in the “A” category or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). • No more than 5% of the total portfolio may be invested in any issuer. • No more than 30% of the total portfolio may be in Municipal Securities. • The maximum maturity does not exceed five years.
2. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency or authority of any of the other 49 states, in addition to California, provided that:
• The securities are rated in the “A” category or its equivalent or better by at least one NRSRO.
• No more than 5% of the total portfolio may be invested in any issuer. • No more than 30% of the total portfolio may be in Municipal Securities. • The maximum maturity does not exceed five years.
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3. U.S. TREASURIES and other government obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries, provided that:
• The maximum maturity does not exceed five years.
4. FEDERAL AGENCIES or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There are no limits on the dollar amount or percentage that the City may invest in Federal Agency or Government-Sponsored Enterprises (GSEs), provided that:
• No more than 30% of the total portfolio may be invested in a single Agency/GSE issuer.
• No more than 20% of the total portfolio may be invested in callable agency securities.
• The maximum maturity does not exceed five years.
5. BANKER’S ACCEPTANCES, provided that:
• They are issued by institutions which have short-term debt obligations rated “A- 1” or its equivalent or its equivalent or better by at least one nationally recognized statistical- rating organization; or long-term debt obligations which are rated in the “A” category or its equivalent or better by at least one NRSRO. • No more than 40% of the total portfolio may be invested in Banker’s Acceptances. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed 180 days.
6. FEDERALLY INSURED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that:
• The amount per institution is limited to the maximum covered under federal insurance.
• No more than 20% of the total portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five years.
7. COLLATERALIZED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions in excess of insured amounts which are fully collateralized with securities in accordance with California law, provided that:
• No more than 20% of the total portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five years.
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8. CERTIFICATE OF DEPOSIT PLACEMENT SERVICE (CDARS)
• No more than 30% of the total portfolio may be invested in a combination of Certificates of Deposit, including CDARS.
• The maximum maturity does not exceed five years.
9. COLLATERALIZED BANK DEPOSITS. Agency’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651.
10. NEGOTIABLE CERTIFICATES OF DEPOSIT (NCDS), issued by a nationally or statechartered bank, a savings association, or a federal association, a state or federal credit union, or by a federally licensed or state licensed branch of a foreign bank, provided that:
• The amount of the NCD insured up to the FDIC limit does not require any credit ratings.
• Any amount above the FDIC limit must be issued by institutions which have shortterm debt obligations rated “A-1” or its equivalent or better by at least NRSRO; or long-term obligations are rated in the “A” category or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in NCDs. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed five years.
11. REPURCHASE AGREEMENTS collateralized with securities authorized under by California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that the City may invest, provided that:
• Securities used as collateral for Repurchase Agreements will be delivered to the City’s custodian.
• Repurchase Agreements are subject to a Master Repurchase Agreement between the City and the provider of the repurchase agreement. The Master Repurchase Agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA).
• The maximum maturity does not exceed one year.
12. COMMERCIAL PAPER, provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
a. SECURITIES issued by corporations:
• The issuer is a corporation organized and operating in the United States with assets in excess of $500 million.
• The securities are rated “A-1” or its equivalent of better by at least one NRSRO. • If the issuer has other debt obligations, they must be rated in a rating category of “A” of its equivalent or higher by at least one NRSRO. 45 9
b. SECURITIES issued by other entities:
• The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
• The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond. • The securities are rated “A-1” or its equivalent or better by at least one NRSRO. • No more than 10% of the outstanding commercial paper of any single issuer. • No more than 25% of the total portfolio may be invested in Commercial Paper. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed 270 days.
13. STATE OF CALIFORNIA LOCAL AGENCY INVESTMENT FUND (LAIF), provided that:
• The City may invest up to the maximum permitted amount in LAIF. • LAIF’s investments in instruments prohibited by or not specified in the City’s policy do not exclude it from the City’s list of allowable investments, provided that the fund’s reports allow the Finance Director to adequately judge the risk inherent in LAIF’s portfolio.
14. CORPORATEMEDIUM TERM NOTES (MTNS), provided that:
• The issuer is a corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States.
• The securities are rated in the “A” category or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in MTNs. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed five years.
15. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASS-THROUGH SECURITIES, AND COLLATERALIZED MORTGAGE OBLIGATIONS, provided that:
• The securities are rated in the “AA” category or its equivalent or better by a NRSRO.
• No more than 20% of the total portfolio may be invested in these securities. • No more than 5% of the total portfolio may be invested in any Asset-Backed or Commercial Mortgage security issuer. There is no issuer limitation on any Mortgage security where the issuer is the US Treasury or a Federal Agency/GSE. • The maximum maturity does not exceed five years.
16. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, provided that:
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a. MUTUAL FUNDS that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
1. Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
2. Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by California Government Code, Section 53601 and with assets under management in excess of $500 million.
3. No more than 10% of the total portfolio may be invested in shares of any one mutual fund.
b. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria:
1. Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
2. Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million.
3. No more than 20% of the total portfolio may be invested in the shares of any one Money Market Mutual Funds.
c. No more than 20% of the total portfolio may be invested in these securities.
17. SUPRANATIONALS, provided that:
• Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.
• The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
• No more than 30% of the total portfolio may be invested in these securities. • No more than 10% of the total portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.
XII. MAXIMUM MATURITY
To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment. 47 11
XIII. PROHIBITED INVESTMENT VEHICLES AND PRACTICES
• State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. • In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. • Investment in any security that could result in a zero interest accrual if held to maturity is prohibited.
• Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.
• Purchasing or selling securities on margin is prohibited. • The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited.
• The purchase of foreign currency denominated securities is prohibited. • The purchase of security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.
XIV. INVESTMENT POOLS/MUTUAL FUNDS
The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. The Finance Director shall develop a questionnaire which will answer the following general questions:
• A description of eligible investment securities, and a written statement of investment policy and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are treated.
• A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. • A description of who may invest in the program, how often, what size deposit and withdrawal are allowed.
• A schedule for receiving statements and portfolio listings. • Are reserves, retained earnings, etc. utilized by the pool/fund? • A fee schedule, and when and how is it assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? 48 12
XV. RISK MANAGEMENT AND DIVERSIFICATION
MITIGATING CREDIT RISK IN THE PORTFOLIO
Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies:
• The diversification requirements included in the “Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio. • No more than 5% of the total portfolio may be invested in securities of any single issuer, unless otherwise specified in this policy.
• The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to improve the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
• If securities owned by the City are downgraded to a level below the quality required by this investment policy, it will be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. • If a security is downgraded, the Finance Director will use discretion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors.
• If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the City Council.
MITIGATING MARKET RISK IN THE PORTFOLIO
Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. On the other hand, longer-term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cashflow purposes.
The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
• The City will maintain a minimum of six months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements. • The maximum percent of callable securities (does not include “make whole call” securities) in the portfolio will be 20%.
• The maximum stated final maturity of individual securities in the portfolio will be 49 13
five years, except as otherwise stated in this policy.
• The duration of the portfolio will at all times be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints and risk tolerances.
XVI. REVIEW OF INVESTMENT PORTFOLIO
The Finance Director shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council.
XVII. PERFORMANCE EVALUATION
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.
The Finance Director shall monitor and evaluate the portfolio’s performance relative to market benchmark, which will be included in the Finance Director’s quarterly report. The Finance Director shall select an appropriate, readily available index to use as a market benchmark.
XVIII.REPORTING
MONTHLY REPORTS
Monthly transaction reports will be submitted by the Finance Director to the City Council in accordance with California Government Code Section 53607.
QUARTERLY REPORTS
Quarterly investment reports will be submitted by the Finance Director to the City Council within 45 days after the end of the quarter.. These reports will disclose, at a minimum, the following information about the characteristics of the City’s portfolio:
1. An asset listing showing par value, cost and accurate and complete market value of each security, type of investment, issuer, and interest rate.
2. Quarterly transactions for the period.
3. A description of the funds, investments and programs (including lending programs) managed by contracted parties (e.g. LAIF, investment pools, outside money managers and securities lending agents.)
4. A one-page summary report that shows:
a. Average maturity of the portfolio and modified duration of the portfolio; b. Maturity distribution of the portfolio;
c. Average portfolio credit quality; and,
d. Time-weighted total rate of return for the portfolio for the prior one month, three months, twelve months, year to date, and since inception compared to the City’s 50 14
market benchmark returns for the same periods;
5. A statement of compliance with investment policy, including a schedule of any transactions or holdings which do not comply with this policy or with the California Government Code, including a justification for their presence in the portfolio and a timetable for resolution.
6. A statement that the City has adequate funds to meet its cash flow requirements for the next six months.
ANNUAL REPORTS
A comprehensive annual report will be presented to the City Council. This report will include comparisons of the City’s return to the market benchmark return, suggest policies and improvements that might enhance the investment program, and will include an investment plan for the coming year.
XIX. REVIEW OF INVESTMENT POLICY
The investment policy will be reviewed and adopted at least annually within 120 days of the end of the fiscal year to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends.
Any recommended modifications or amendments shall be presented by Staff to the City Council for their consideration and adoption.
Prepared by:
Wendy Howard, Finance Director
Approved:
John Kenny, Attorney at Law
City Attorney
Approved:
Pamelyn Anne Morgan,
Mayor City Council
Date:
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GLOSSARY OF INVESTMENT TERMS
AGENCIES. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:
FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.
FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market.
FHLB issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities.
FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities.
GNMA. The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds.
ASKED. The price at which a seller offers to sell a security.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
AVERAGE LIFE. In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected.
BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.
BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.
BID. The price at which a buyer offers to buy a security.
BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position.
CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable.
COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels 52 16
of prepayment risk, as compared to the underlying mortgage securities.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
COUPON. The rate of return at which interest is paid on a bond.
CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.
CURRENT YIELD. The annual income from an investment divided by the current market value.
Since the mathematical calculation relies on the current market value rather than the investor’s cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position.
DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent.
DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.
DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.
DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration).
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
FEDERALLY INSURED TIME DEPOSIT. A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.
FIDUCIARY. A person or organization that acts on behalf of another person(s) or organization that puts their clients’ interest ahead of their own as they are bound both legally and ethically to act in the other’s best interests.
LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.
LIQUIDITY. The speed and ease with which an asset can be converted to cash.
MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole."
MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral.
MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded. 53 17
MATURITY. The final date upon which the principal of a security becomes due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.
MEDIUM TERM NOTES. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis.
MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.
MODIFIED DURATION. The percent change in price for a 100 basis point change in yields.
Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.
MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities.
Examples of investments in money market funds are certificates of deposit and U.S.
Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.
MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.
MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO). A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk.
The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or statelicensed branch of a foreign bank. Negotiable CDs are traded in a secondary market.
PAYDOWN. A reduction in the principal amount owed on a bond, loan, or other debt.
PREMIUM. The difference between the par value of a bond and the cost of the bond, when the cost is above par.
PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S.
Government securities market.
PRUDENT INVESTOR (PRUDENT PERSON) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities and that is not a primary 54 18
dealer.
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.
STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.
SURPANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.
U.S.TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds.
TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three- and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows.
TREASURY NOTES. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually.
TREASURY BONDS. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually.
VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.
55 Report and Recommendations 8.3 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Charity Tatlow, Deputy City Clerk
DATE: February 4, 2025
SUBJECT: DESIGNATE A CITY COUNCIL REPRESENATIVE FOR THE REGION 1, CALCITIES SACRAMENTO VALLEY DIVISION
FILE NO.:
RECOMMENDATION
Staff recommends that the City Council designate a member of the City Council for the Region 1, CalCities Sacramento Valley Division to represent the City of Shasta Lake.
BACKGROUND
The CalCities Sacramento Valley Division includes cities in 18 counties and provides members the opportunity to exchange ideas and information and share the advantages of cooperative advocacy.
The division is guided by an executive committee under the leadership of a division president. Elected city officials and professional city staff attend division meetings throughout the year to share what they are doing and advocate for their interests in Sacramento. Division members also participate in the development of CalCities policy through representation on multiple committees.
The representative will be able to participate in monthly division Zoom meetings and inperson Cal Cities meetings.
FISCAL IMPACTS:
The City is a CalCities member and funds have been appropriated and available in the budget for Fiscal year 2024-2025.
56 ATTACHMENTS
None
DISTRIBUTION
City Council
City Manager
57 1
Jessaca Lugo
From: Charity Tatlow
Sent: Monday, November 25, 2024 3:50 PM
To: City Council
Cc: City Clerk
Subject: Region 1 Vacancies
Hello,
Please see the email below regarding the vacancies for Region 1. Let me know if this would interest you.
Thank you,
Charity Tatlow
From: Charles Anderson <[email protected]>
Sent: Monday, November 25, 2024 2:42 PM
To: [email protected]; Jessaca Lugo <[email protected]>; ofclerk‐[email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected] Subject: NEEDED: Region 1 Representatives to the Sacramento Valley Division Board Good aŌernoon city managers in Siskyou, Modoc, Shasta and Lassen CounƟes. Your ciƟes are in the Division’s Region 1 for purposes of representaƟon on the Sacramento Valley Division Board. We currently have two vacancies for Region 1 RepresentaƟve for a mayor or council member to fill. If you have someone you think may be a good fit and or is looking to get more involved with the League of California CiƟes this is an excellent opportunity for them. Please have them reach out to me as soon as possible.
The Sacramento Valley Division Board meets virtually by zoom on the 2nd Monday of nearly every month at 12:00 p.m. noon. The meeƟngs can be up to an hour long but are typically 30‐40 minutes. The agenda mostly centers on division meeƟng planning. Region RepresentaƟves are expected to parƟcipate in these virtual meeƟngs but when they are unable they just need to let me and or the division president know they cannot aƩend. Failure to parƟcipate in two consecuƟves meeƟngs without excuse can have their appointments revoked. There are also 4 division membership meeƟngs per year. One of which is at annual conference. Board members are encouraged to aƩend.
Charles
Charles Anderson
Regional Public Affairs Manager, Sacramento Valley Division League of California Cities
Cell: 916-798-2231
[email protected]| www.calcities.org
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